Financial tech ads on the web should follow consumer finance protection regulations.
Could fintech marketers be neglecting compliance with consumer finance regulations? If fintech were found to be ignoring, or worse, taking advantage of, the holes in the way fintech web advertising are checked, would it cost them money and reputation? The reasons why the CFPB had to issue a harsh warning to fintech online marketing teams about not ignoring federal consumer finance protection regulations have been addressed in this article.
Fintech products use the same digital marketing and native advertising strategies as other products. To regulate fintech advertisers, there has to be a better legislative framework. Federal consumer financial protection laws may not be followed when financial products and services are targeted based on consumer behaviour. An important regulation announcement has been made by the Consumer Financial Protection Bureau (CFPB) in order to unite all fintech advertisements under a single system of legal governance. In accordance with the current federal consumer financial protection law, this regulation lays forth the different intricacies of marketing and advertising of financial products.
Budgets for Advertising in the Fintech Industry
Without focused advertising campaigns, it is hard to consider customer experience management and automated notifications in fintech. One of the largest markets for advertising in the globe is fintech. Nowadays, consumers would rather use mobile apps and fintech platforms than cash to make payments. Following the pandemic lockdown, advertisers increased their targeting strategies and improved their marketing visibility by focusing on the finance sector. Fintech marketers have advanced the use of technology for behavioural targeting in several ways. The trends in gamification, LTV, CTV, live streaming, and influencer marketing demonstrate how Fintech advertisers not only kept up with technology during the pandemic, but also purposefully hired the greatest number of people for their marketing and advertising teams to expand business prospects during uncertain times. You compete in the same digital advertising environment whether you are a direct-to-consumer brand or a core Fintech player. Web and mobile advertising employing behavioural targeting tactics continues to draw attention as numerous Fintech companies seek to locate, serve, and retain the new population of audiences.
This is why policymakers at the federal level have identified loopholes.
Digital marketers with a fintech focus who are involved in the discovery or selection of potential clients or the choice or placement of content to influence consumer behaviour are often considered service providers for legal purposes, according to the CFPB. The CFPB or other law enforcement agencies have the authority to hold digital marketers that pose as service providers accountable for engaging in unfair, abusive, or deceptive conduct or practices as well as other violations of consumer financial protection.
According to CFPB Director Rohit Chopra, Big Tech companies that use advanced behavioural targeting methods to promote financial products must comply with federal laws that protect consumers. If they violate these laws, federal and state law enforcement officials have the authority and obligation to take action against them.
Every player in the fintech industry nowadays wants to be reachable by smartphone or other smart devices. There are 22 billion smart gadgets, and having access to them implies having a sizable database of data that could be compared to a marketing analytics gold mine. It would now take marketing muscle to reach this audience base and persuade them to become users and customers, and this marketing muscle can only be obtained by mining more first-party data through strategic advertising channels. Therefore, to overcome obstacles in behavioural targeting, Fintech is combining data science (AI, ML, and NLP) with marketing and advertising technologies (Martech/Adtech).
Providers of digital marketing have changed advertising. The goal of conventional advertising is to reach as many people as you can with a certain good or service. For instance, a typical marketer could try to pay for airtime and space for a TV ad during the most popular program or station. On the other side, digital marketers work to increase how often people connect with their adverts. To feed the behavioural analytics models that can target people or groups who they believe are more likely to interact with an advertisement or sign up for a product or service, they may gather personal data from users.
Digital marketing companies can fall under the purview of the Consumer Financial Protection Act if their activities extend beyond conventional advertising. Companies who simply provide time or space for an advertisement for a consumer financial product or service through print, newspaper, or electronic media are exempt from the Act's requirements. The CFPB clarified today, however, that businesses that are materially involved in the creation of content strategy are not covered by the exception.
The Consumer Financial Protection Act often applies to digital marketing companies when they go beyond traditional advertising. Companies who simply provide time or space for an advertisement for a consumer financial product or service through print, newspaper, or electronic media are exempt from the Act's requirements. The CFPB clarified today, however, that businesses that are materially involved in the creation of content strategy are not covered by the exception.
The interpretive rule announced today clarifies:
According to the Consumer Financial Protection Bureau (CFPB), digital marketers who provide material services to financial firms, such as identifying potential customers or developing content strategies, are significantly involved in the marketing process and must comply with consumer financial protection laws. In such cases, digital marketers cannot rely on the "time or space" exception for advertising. Additionally, the CFPB and other consumer protection agencies can take legal action against these digital marketers if they violate consumer financial protection laws, as they are liable for any unfair, deceptive, or abusive acts or practices under the Consumer Financial Protection Act.
We would require stronger knowledge management and technological assistance as new rules to regulate Fintech online ads come into play if we were to guarantee the security and privacy of data for Fintech users and clients.
